fp
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Post by fp on Aug 7, 2016 15:09:57 GMT
I work on the theory that the highest level of risk is at the end of the loan, as i'm sure many more on here do.
Based on that, I am happy to risk earning no interest and have it tucked away somewhere else, rather than risk loss of capital at the end of the loan term should it default and not realise its full potential for whatever reason.
Interestingly, having just had a quick tally up, almost a third of the current loan book (£38m) is either showing as overdue or will be ready for repayment in the next 4 to 6 weeks.
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Post by geraldine1210 on Aug 7, 2016 15:19:34 GMT
I work on the theory that the highest level of risk is at the end of the loan, as i'm sure many more on here do. Based on that, I am happy to risk earning no interest and have it tucked away somewhere else, rather than risk loss of capital at the end of the loan term should it default and not realise its full potential for whatever reason. Interestingly, having just had a quick tally up, almost a third of the current loan book (£38m) is either showing as overdue or will be ready for repayment in the next 4 to 6 weeks. There should be 760K in the provision fund. That will get used up very quickly. Maybe it needs a rethink. Perhaps putting in an initial 2%, but leaving half in when the loan is repaid. I also think if a loan goes into default that investors should not expect to get interest back after the date of the default, if it involves dipping into the provision fund.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Aug 7, 2016 15:26:51 GMT
I work on the theory that the highest level of risk is at the end of the loan, as i'm sure many more on here do. Based on that, I am happy to risk earning no interest and have it tucked away somewhere else, rather than risk loss of capital at the end of the loan term should it default and not realise its full potential for whatever reason. Interestingly, having just had a quick tally up, almost a third of the current loan book (£38m) is either showing as overdue or will be ready for repayment in the next 4 to 6 weeks. There should be 760K in the provision fund. That will get used up very quickly. Maybe it needs a rethink. Perhaps putting in an initial 2%, but leaving half in when the loan is repaid. I also think if a loan goes into default that investors should not expect to get interest back after the date of the default, if it involves dipping into the provision fund. There is (or should be) £2,493,555 in the PF (see here, and scroll down  )
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fp
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Post by fp on Aug 7, 2016 15:27:26 GMT
I work on the theory that the highest level of risk is at the end of the loan, as i'm sure many more on here do. Based on that, I am happy to risk earning no interest and have it tucked away somewhere else, rather than risk loss of capital at the end of the loan term should it default and not realise its full potential for whatever reason. Interestingly, having just had a quick tally up, almost a third of the current loan book (£38m) is either showing as overdue or will be ready for repayment in the next 4 to 6 weeks. There should be 760K in the provision fund. That will get used up very quickly. Maybe it needs a rethink. Perhaps putting in an initial 2%, but leaving half in when the loan is repaid. I also think if a loan goes into default that investors should not expect to get interest back after the date of the default, if it involves dipping into the provision fund.I haven't particularly looked at how the provision fund works, but I don't expect it would be used to pay interest, more a case off topping up any shortfall in initial capital to investors. On a personal note, i'm hoping to avoid taking advantage of it at all, I only have 3 loans with less than 100 days to run.
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Post by GSV3MIaC on Aug 7, 2016 15:28:59 GMT
There should be ~£2.2m in the provision fund. The £760k relates only to the 1/3rd of the loan book about to (or overdue to) repay.
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ben
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Post by ben on Aug 7, 2016 15:55:51 GMT
Example (fictitious). Garden Centre. I want a six month loan. I sell at 5 months 30 days (or less). Lucky me. I didn't want a 13 month loan with no chance of selling my loan parts. Real example in another place. Epping. Ipswich. Didn't hold to term. Well, well. Borrower plays silly b*gg*rs. I have no waiting for my money and no (eventual) capital loss. In the meantime my cash has been earning interest elsewhere. We always have to trust that a borrower will repay, but selling before maturity dispenses with some of the risk. I cannot answer the question of why others are prepared to take the risk from me. Don't really know why the question was asked by a non-"newby". Sorry I do not think I made myself that clear, I can understand why people want to sell when a loan comes near to the end. But I think investing more then you want to hold in a loan in case you can not sell it is pretty daft, a few posters on here seem to buy what they can with the intention of selling later what happens when the market changes? and you can not sell on how much panicking has there been on this forum, only a few weeks ago when there was a few million on the secondary market and that was after one default where the provisional fund is enough to cover it.
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oldgrumpy
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Post by oldgrumpy on Aug 7, 2016 16:01:21 GMT
Ah, using the overbuy as a fund park while waiting for later loans - and getting caught out.
I don't do that in SS.
I do it in AC to some extent in decent security smaller loans 8-9% (usually easily saleable) rather than lodge too much money in the QAA at 3.75%.
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boble
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Post by boble on Aug 7, 2016 16:12:47 GMT
Those of you who have a 'policy' of selling loans once they reach less than 'XX' days to repayment ....... What do you do if there's nothing better to buy (like now....) I recently sold some loan parts I was not happy with but find myself in the position where I have nothing to replace them with ....therefore losing circa 10.5% per month (assuming the money is invested elsewhere at a measly rate) How do others treat this situation...?? Although I do see loans that fall within my XX limit as riskier, I do believe that a diverse portfolio is just as important. In order of importance... 1. DD 2. LTV (90day if available) 3. Days Remaining 4. Recent Updates 5. Gut feeling I find that I am no longer able to consider "Recent Updates" as they are are best very unreliable. Also, with most lending of this type, it is what you "don't know" that represents the greatest risk.
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adrianc
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Post by adrianc on Aug 7, 2016 16:12:48 GMT
I can understand why people want to sell when a loan comes near to the end. But I think investing more then you want to hold in a loan in case you can not sell it is pretty daft, a few posters on here seem to buy what they can with the intention of selling later what happens when the market changes? and you can not sell on how much panicking has there been on this forum, only a few weeks ago when there was a few million on the secondary market and that was after one default where the provisional fund is enough to cover it. Quite. And now look. We're back to FFF in all bar one or two loans - and, on the whole, even they're moving reasonably well. If you expect 100% guaranteed instant availability, then SS is not for you.
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Post by geraldine1210 on Aug 7, 2016 16:27:47 GMT
There should be 760K in the provision fund. That will get used up very quickly. Maybe it needs a rethink. Perhaps putting in an initial 2%, but leaving half in when the loan is repaid. I also think if a loan goes into default that investors should not expect to get interest back after the date of the default, if it involves dipping into the provision fund. There is (or should be) £2,493,555 in the PF (see here, and scroll down ) Yep. You're right. 'Should be'? That's a bit ominous.
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Post by geraldine1210 on Aug 7, 2016 16:30:18 GMT
Although I do see loans that fall within my XX limit as riskier, I do believe that a diverse portfolio is just as important. In order of importance... 1. DD 2. LTV (90day if available) 3. Days Remaining 4. Recent Updates 5. Gut feeling I find that I am no longer able to consider "Recent Updates" as they are are best very unreliable. Also, with most lending of this type, it is what you "don't know" that represents the greatest risk. I bump gut feeling above updates. The updates don't seem to mean very much.
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Post by buttchopf23 on Aug 7, 2016 16:41:40 GMT
if someone sets up his own policy to sell after xx days, then stick to your rules, although, this rule is nothing for me.
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adrianc
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Post by adrianc on Aug 7, 2016 16:44:49 GMT
There is (or should be) £2,493,555 in the PF (see here, and scroll down ) Yep. You're right. 'Should be'? That's a bit ominous. I think it's fairly well established that the PF is not much more than a nominal figure providing a comfort blanket, and it's not actually a separate figure in any way.
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Post by geraldine1210 on Aug 7, 2016 16:47:14 GMT
Yep. You're right. 'Should be'? That's a bit ominous. I think it's fairly well established that the PF is not much more than a nominal figure providing a comfort blanket, and it's not actually a separate figure in any way. The comfort blanket just became very ragged.
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adrianc
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Post by adrianc on Aug 7, 2016 16:54:14 GMT
I think it's fairly well established that the PF is not much more than a nominal figure providing a comfort blanket, and it's not actually a separate figure in any way. The comfort blanket just became very ragged. No, not at all. It is exactly what it's always been. All SS are saying with their discretionary PF not being ringfenced is that they probably will cover our losses, if they feel like it - and that they have budgeted for that coverage to cost them around 2% of the current loan book. So far, they've been £0.00 since SS started.Frankly, for 12% headline return, we should be expecting reasonably substantial losses - much more than the current garden centre, and quite probably more than the loans linked to our friend of dubious repute.
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